How to reflect RMD

Shirley Winkler

I set up a scheduled monthly transaction to transfer my RMD amount from my 401K to my checking account, my 401K balance decreases correctly. My checking account does show the transfer and my balance is correct BUT - I need to categorize the transfer into my checking account as taxable income - currently it's categorized as transfer. Any suggestions?

Frankx

Hi @Shirley Winkler

This is a known problem, and luckily one of my fellow Super Users @jacobs  has done a great job of laying out exactly how to make the entries needed to have these RMD's show up as taxable income.  Just a note that some of the parts of the post I am linking below may not apply to your case (for example the solution talks about taxes being withheld, which is not your issue.  But pay special attention to the steps noted at paragraph (3) because that is what you are trying to do.

Let us know if you have any followups,

LINK

Frankx

Shirley Winkler

Thanks for posting this Frank. I had seen that article but didn't think it applied to me and you proved me wrong. Thanks for calling my attention to paragraph 3 as it did the trick! I'm sure that this is a problem for all of us over 72 and I'm shocked that Quicken hasn't come up with an easier resolution although once I set up the scheduled transaction I shouldn't have to bother with it again. Thanks again.

NotACPA

Actually, Q HAS come up with an easier resolution ... at least in QWin.  Transfers in/our of accounts can have Tax Attributes attached to them via the "Tax Schedule" button of the Account Dialog. 

jobworker

I set up the recurring RMD in my checking account as "Personal Income/Taxable IRA Withdrawal", see screen shot of Categories and I also set it up as a recurring transactions in my IRA account.  Each act independently when they occur at their respective F/I's.  I don't see the problem.  I don't do anything and everything reconciles in the respective accounts and the Personal Income is reflected correctly in my Tax Schedule report.

NotACPA

@jobworker, thanks for the confirmation that the SAME functionality exists in QMac.

Shirley Winkler

Hmmm - I see what you are saying by setting up a + and a - treating each account independent of the other. I'm not certain I like NOT reflecting a transfer from the Retirement Account into the Checking Account though which the other option provided. Thanks for the alternative method though.

jacobs

Nope. The same functionality as Quicken Windows does not exist in Quicken Mac. 

The issues is that you need to do a transfer (from the IRA account to the non-retirement account) and you need a categorized transaction (to record taxable retirement income). Transfers are not — or should not be — income. (In the current Quicken Mac, there is a way to get a transfer to have a category, but it messes up some reports and because it goes against the rules of accounting, the product manager has said that senior management has decided they will block this capability in the future.)

Thus you need to do the transfer, and then additionally (separate transaction or two additional split lines in the same transaction) create the income and offset it with a split to the Adjustment category, which essentially lets you create income out of nowhere. @jobworker You show the correct Category to use to recognize the taxable income; however, you still need to offset it with the Adjustment in the opposite direction so the dollar amount isn't double counted (once from the transfer, once from the income) in your checking or money market account. 

Shirley Winkler said:

I'm not certain I like NOT reflecting a transfer from the Retirement Account into the Checking Account though which the other option provided.

You  definitely should have a transfer from the retirement account to the checking or money market account which received the withdrawal. If you don't use Quicken;'s tax report, that's all you need. But if you do use Quicken's tax report, you need the additional offsetting Income/Adjustment "trick" to make this show up as taxable income without further affecting your account balances.

Shirley Winkler

Sounds like a good plan. Thanks for your time in responding.